Some real mixed messages are coming out of the property market currently. This is Money reports;
The lockdown property market mini-boom has pushed house prices up 5 per cent on a year ago, the biggest jump since September 2016, new figures from Nationwide show.
The property market has been buoyed by Chancellor Rishi Sunak’s stamp duty holiday from July to the end of March next year, but had already seen a surge in activity after house hunters got the green light to get moving again in May.
But economists at the EY Item Club warned the current rise in property prices will become ‘unsustainable sooner rather than later’ as mass job cuts loom, the stamp duty holiday ends and further lockdown-induced economic turmoil potentially takes hold.
Meanwhile, estate agent Lucy Pendleton, who called a summer boom while most others forecast a bust, has said the market may have already hit its ‘peak’.
Nationwide’s report showed annual property inflation at 5 per cent, with the average home costing £10,777 more than a year ago.
It also looked at potential home buyers’ motivations, many of whom indicated they had lockdown itchy feet, with 35 per cent hoping to move to a different area and 30 per cent doing so to get access to a better garden or open space.
‘The rebound reflects a number of factors,’ said Robert Gardner, Nationwide’s chief economist.
He added: ‘Pent-up demand is coming through, with decisions taken to move before lockdown now progressing.
‘The stamp duty holiday is adding to momentum by bringing purchases forward.
‘Behavioural shifts may also be boosting activity as people reassess their housing needs and preferences as a result of life in lockdown.’
Estate agents report that family homes and the expensive properties are the busiest parts of the market, while first-time buyers are having their ambitions hit by a mortgage crunch.
According to separate recent data from NAEA Propertymark, nearly one in seven homes were sold in August for more than the asking price, which is the highest rate since November 2015.
Gardner said the pandemic was encouraging people to move. Lockdowns and working from home have spurred many people to look for new properties with more space and a garden, while being less concerned about commuting distances for the time being.
A quarter of people surveyed by Nationwide in London said they were moving as a result of lockdown, while a further 15 per cent of people in the capital admitted they were considering moving.
Lucy Pendleton also added: ‘The market is strong but some vendors have mistakenly started to believe any property in any condition will sell. Those vendors have got the wrong end of the stick. Quality homes are selling but buyers are not being reckless and won’t pay top dollar for properties that need a lot of money spent on them.’
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